The stock market's recent attempt to lift off of session lows has run into resistance. That has left stocks to continue trading with sizable losses, although the stock market is still above its worst level of the day.
Oil prices have been paring losses this afternoon. The energy component had been just beneath $99.50 per barrel in electronic trade this morning, but contracts are now quoting oil prices at $100.80 per barrel, which makes for only a 0.4% loss.
Oil's rebound is helping the energy sector make a push toward the neutral line. The energy sector is now down just 0.2%. Tech, down 0.7%, makes up the next best performing sector.
GBP/USD printed high on $1.6200 but cable has settled back modestly from there to trade around $1.6171 as earlier mentioned offers at $1.6200/10 capped. Further supply seen at $1.6220 though a few stops are also seen mixed in.
The euro advanced after European Union leaders agreed on a retooled bailout plan for the region’s most indebted nations.
The 17-nation currency rose for a second day against the dollar after regional leaders agreed during the weekend to widen the scope of a rescue fund aimed at resolving the debt crisis and cut the cost of loans to Greece.
“The European accord is quite significant and a better outcome than the market was expecting so that will be a positive for the euro,” said Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. “With the European Central Bank looking to hike rates in April the euro could be ripe to break that key $1.40 level in the near term.”
The ECB’s governing council is scheduled to meet March 17.
The yen erased a gain against the dollar as Japan’s central bank said it will add 15 trillion yen ($183 billion) to the financial system and increase its asset-purchase program following last week’s earthquake.
BOJ Governor Masaaki Shirakawa and his board also doubled the facility that buys assets from government bonds to exchange- traded funds to 10 trillion yen. Besides the 15 trillion yen of emergency funds deployed, the central bank offered to buy 3 trillion yen of government bonds from lenders in repurchase agreements starting March 16.
Borrowing costs were cut near zero in 2008 as officials sought to revive growth and end deflation. Finance Minister Yoshihiko Noda said earlier today that he’s closely watching the foreign exchange, stock and Japanese bond markets.
“The yen reached 80.62 and we bounced off of that as the Bank of Japan responded with flooding the market with liquidity,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co.. “The yen will consolidate around these levels until we get a clearer picture.”
Australia’s dollar slid. Traders have cut bets the Reserve Bank of Australia will raise interest rates over the next year.
Tech traders highlight the $1.6087 level as pivotal for GBP/USD. While rate can hold above seen keeping focus on the upside with potential for a test on $1.6140. Rate currently trades around $1.6123. Offers said to remain in place from this high and extending to $1.6130. Stronger offers noted from $1.6140 through to $1.6150 with stops above.
EUR/USD
Offers: $1.4000, $1.4035, $1.4050, $1.4080/85
Bids:$1.3930, $1.3905/00, $1.3875/70, $1.3850/40
USD/JPY
Offers: Y82.20, Y82.45/50, Y82.70
Bids: Y81.20, Y80.60, Y80.25/20, Y80.10/15
GBP/USD
Offers: $1.6130, $1.6140/50, $1.6180/85, $1.6200, $1.6220
Bids: $1.6080/70, $1.6050, $1.6010/00
"Higher energy prices pose some downside risk to growth, but the impact is more likely to be felt next quarter assuming oil prices remain over $100 per barrel. A substantial portion of the growth in the current quarter is likely to come from inventory restocking." They est auto sales will fall with higher gas prices. Better household wealth and easier credit may be offsets.
Stocks are under pressure in the early going. They had started to pare their opening gap down, but pressure has picked back up to take the broader market another leg lower.
Utilities stocks are under the most pressure at the moment. The sector's 1.8% loss has been led by weakness among electric utilities (-2.0%), which have been implicated by concerns about Japan's nuclear plants, which have been compromised by the massive earthquake that hit the country late last week.
U.S. stocks were set to open lower Monday, after Japan's leading stock index plunged in reaction to the damage from last week's massive earthquake and tsunami.
The Nikkei ended down 6.2%, the index's biggest one-day drop since late 2008.
U.S. stocks ended higher Friday, despite news of the massive earthquake and tsunami in Japan. But all three major indexes ended lower for the week -- a week that included the ongoing civil war in Libya and planned protests in Saudi Arabia. The Dow and S&P 500 fell more than 1%, while the Nasdaq sank almost 2.5%.
World markets:
Companies: The U.S.-traded shares of some companies based in Japan were down sharply in premarket trade Monday.
Shares of Canon (CAJ), based in Tokyo, were down more than 6% in premarket trading. Toyota (TM) shares were off 7.5% early Monday, while Sony (SNE) was down 8.4%.
Early Monday, Warren Buffett's Berkshire Hathaway (BRKA) said it would acquire Lubrizol for $135 per share in an all-cash transaction. That's a 28% premium over Lubrizol's closing price Friday. The deal, valued at approximately $9.7 billion, is one of Berkshire's biggest acquisitions ever.
Shares of Berkshire (BRKB) edged lower, while Lubrizol's (LZ) stock jumped almost 27% in premarket trading.
With oil prices under pressure, airline stocks could gain some attention during Monday's trading day. Shares of Southwest Airlines (LUV) were down more than 5.4% in premarket trading.
Oil for April delivery slipped $1.52, or 1.5%, to $99.64 a barrel on concerns about the fallout from Japan's earthquake.
Gold futures for April delivery added $4.90, or 0.3%, to $1,426.70 an ounce.
The price on the benchmark 10-year U.S. Treasury was little changed, with the yield holding at 3.39%.
April WTI Crude picking up with a European session high of $99.89 after earlier look at $98.46, but running into some hourly trendline resistance ahead of $100.00. Support now seen at $97.00 with resistance at $101.45.
The euro advanced versus most of its counterparts after European Union leaders agreed on a retooled bailout plan for the region’s most indebted nations.
The 17-nation common currency rose for a second day against the dollar after European leaders agreed last weekend to widen the scope of a rescue fund aimed at resolving the sovereign-debt crisis and cut the cost of loans to Greece.
“The euro has benefited as the preliminary EU summit was positively received,” said Adam Myers, a senior foreign- exchange strategist at Credit Agricole Corporate & Investment Bank in London. “The summit delivered more than the market expected, and that’s a short-term positive for the euro.”
Euro-area leaders negotiated an accord to allow primary- market bond purchases that will offer a lifeline to aid recipients in return for austerity commitments. The agreement broke a deadlock as policy makers sought to extinguish a crisis that has raged for more than a year and forced Greece and Ireland to seek financial aid.
Leaders will allow the facility to spend its full 440 billion-euro ($613 billion) capacity, removing restrictions that would have capped outlays at about 250 billion euros, though it won’t be used to finance bond buybacks for debt-strapped states. A final agreement is slated for a summit on March 24-25.
“The European accord is quite significant and a better outcome than the market was expecting, so that will be a positive for the euro,” said Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington. “With the ECB looking to hike rates in April, the euro could be ripe to break that key $1.40 level in the near term.”
The European Central Bank’s governing council is scheduled to meet on March 17.
The yen declined versus most of its 16 major counterparts as the central bank said it will add 15 trillion yen ($183 billion) to the financial system and increase its asset-purchase program.
The yen fell against the dollar, erasing its earlier advance to a four-month high, as the Bank of Japan pumped record funds into an economy reeling from the nation’s strongest earthquake. The emergency measure represents the Japanese central bank’s first same-day repurchase operations since May, when it added funds to stabilize markets amid the Greek crisis.
BOJ Governor Masaaki Shirakawa and his board also doubled the facility that buys assets from government bonds to exchange- traded funds to 10 trillion yen. Besides the 15 trillion yen of emergency funds deployed, the central bank offered to buy 3 trillion yen of government bonds from lenders in repurchase agreements starting March 16.
EUR/USD $1.4000, $1.3850, $1.3750
USD/JPY Y81.00, Y81.50, Y82.00, Y82.70, Y83.00
GBP/USD $1.6000, $1.6200
USD/CHF Chf0.9210
AUD/USD $0.9900, $1.0000, $1.0025, $1.0100, $1.0200
AUD/JPY Y83.25
NZD/USD $0.7380
NZD/JPY Y61.50
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